Subject: Power Decree 804 and Resolution 135
From: [email-masked]
To: [email-masked], [email-masked]
Cc: [email-masked], [email-masked], [email-masked]
Date: Tue, 3 Jul 2001 16:02:00 -0700 (PDT)

This is to inform you the recent approval of the below commented rules in 
Argentina. If the economic and political environment gets calmer, these rules 
will be an important step in the power deregulation process an will allow us 
to reach some of the goals set for the regulatory group for this year.

Goal 1- Eliminate or Increase fuel declaration caps: there will not be more 
fuel declarations but price declarations (Section 1, Resolution 135). The 
rules do not mention any cap for price declarations.

Goal 2 - Daily fuel declaration: The 6 month fuel declaration was replaced by 
a daily price declaration (Section 1, Resolution 135).

Goal 3 - Reduce or eliminate the obligation to physically back up agreements 
with end users or LDCs: According to the interpretation of AGEERA (Gencos 
Association) we would have been gotten also this objective and marketers may 
already buy or sell spot as long as the contract with the customer does not 
have supply guarantee (Section 5, Resolution 135). It is not clear in the 
rule wich is the condition for marketers to buy or sell spot.

Now the Secretariat of Energy must issue its own Resolution to amend the 
technical Procedures in line with these rules. From the text of Resolution 
135 (sections 3 c, 5 and considerations) there would be a good probability to 
reach other two goals through the Secretariat of Energy rule:
Reduce minimum term for Output & Demand Marketing Agreements to one month
Eliminate or reduce to 1 MW the threshold for Output Marketing Agreements

Amr and I are asisting Buenos Aires Ofice to analize the new rules to 
eventually submit comments to the Secretariat of Energy.
Attached is the document with the regulatory goals.
Regards
Guillermo

---------------------- Forwarded by Guillermo Canovas/SA/Enron on 07/03/2001 
08:40 PM ---------------------------

Andrea Calo
06/29/2001 06:49 PM
To: Jose Bestard/ENRON_DEVELOPMENT@ENRON_DEVELOPMENT, Sergio 
Assad/SA/Enron@Enron, Michael Guerriero/SA/Enron@Enron, Remi 
Collonges/SA/Enron@Enron, Julian Poole/SA/Enron@Enron, Roberto 
Volonte/ENRON@enronXgate, Laura Feldman/SA/Enron@Enron, Guillermo 
Canovas/SA/Enron@Enron, Maria Pia Beccaccini/SA/Enron@Enron, Rodolfo 
Freyre/SA/Enron@Enron, John J Shoobridge/SA/Enron@Enron
cc:  
Subject: Power Decree 804 and Resolution 135

In an attempt to further reduce State intervention in the power market, on 
June 19, the Executive Branch issued Decree 804/01 which completes the 
deregulation process of the power industry initiated in 1992, and amends 
Electricity Law 24.065.  On June 26 the Minister of Infrastructure issued 
Resolution 135/01 setting forth  the guidelines for the future regulation of 
the Decree. 

The Secretariat of Energy's resolution that will regulate the Decree will be 
effective as from September 1, 2001. All agents of the electric sector will 
be invited to comment the terms of regulatory decree, although such comments 
will be used for informational purposes and will not bind the Secretariat of 
Energy to make any changes whatsoever to its original document.  

Although Decree No 804/01 is effective as from today, there are doubts in the 
industry as to whether it will be abolished in the future by Congress.  The 
reason for this uncertainty is that such Decree was issued within the 
framework of the Competitivity Law, by which Congress delegated to the 
Executive Branch its  powers to legislate  specifically on changes required 
to transform the economy.  Although this Decree and the changes it fosters 
indirectly affect the economy, since the law it amends is not purely 
"economical", it may be questioned.  There is no term within which Congress 
may exercise this right. 

Please find a summary of the relevant changes below.

Generators Remuneration:
Forward Market: freely negotiated
Spot Market:  only payment of "hourly spot price" at each node.
Hourly Spot Price: determined by price offers based on demand and 
transportation constraints

Daily Declarations
The day before the daily dispatch, each Generator shall: 
declare its price offers for each  peak, shoulder and valley hour at its 
node; 
declare its maximum operating limits and minimum available capacity;  
offer all of its available capacity.

Calculation of Hourly Spot Price "HSP"
HSP shall be calculated by the OED according to procedure to be determined by 
the Secretariat of Energy, not based on marginal costs as it is today.
Prices shall be calculated at each node before the initiation of each day.
At the end of each day prices shall be recalculated based off real operations 
on the system.

Spot Market
Generators and Marketers shall be paid on an hourly basis according to the 
volume of energy delivered at the node, which shall be valued at the HSP.
If distributors, large users and/or marketers enter into supply contracts 
then to clear transactions on the spot market , the OED shall consider that 
the sellers (Marketers/Generators) assume their clients payment obligations 
before the market.
On spot market transactions, Generators shall not receive payments for any 
other concept.

Forward Market
Generators and Marketers may enter into contracts with distributors, 
marketers and large users at freely negotiated prices and terms.

Marketers
Are now considered agents of the electric sector.
May enter into forward contracts and/or carry our purchase and sale 
transactions on the spot market at the node HSP.
Must declare their offer and demand at each node of the system.
Their obligations shall be similar to those of Generators and Distributors 
when they transact at the MEM.

Congestion Rights  
Right to receive profits resulting from the difference in energy prices 
between two nodes related to the link and the capacity charge of the relevant 
transmission system.
In the case of: 
Existing transportation lines under concession, these rights belong to the 
State, which will sell them under a public offering called by the  
Secretariat of Energy.
Existing transportation lines carried out by an independent transporter shall 
belong to such transporter.
New transportation lines, shall belong to the owner of the same.

Expansions
Sole Risk Investment Expansions: Open to anyone who is interested; will 
require technical and environmental certification of the ENRE and license 
from the                 Secretariat of  Energy.

System Reliability Expansions:  Shall be built by awardee of public tender.

Distributors
Have to satisfy all demand of users within their area that have the choice of 
independently contracting their supply in the  MEM; Distributors may offer 
contracting options with or without supply guaranty; these contracts shall be 
considered special contracts
When they contract their demand with Generators and/or Marketers, the general 
terms of the contracts as well as the procedure for selecting suppliers will 
be subject to guidelines established by the Secretariat of Energy;
In order for the price under these contracts to be passed through to their 
end users tariffs, the relation between the term of the contracts and the 
volume purchased must comply with a chart that basically states that the 
greater the term of the contract, the lesser the percentage of contracted 
energy.
In any case, the total amount of energy contracted can not be in excess of 
the total demand of users that can't transact on the MEM.

Forced Dispatch
Distributors may request forced dispatch of certain units;
The Distributor that requests forced dispatch is responsible for payment of 
the same, Secretariat of Energy to control if forced dispatch costs are 
reasonable.
Such price shall not be transferred to end users and shall not be taken into 
account to calculate the HSP.